New federal overtime rule that would affect millions has been blocked by federal court

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Credit: CNNMoney/Shutterstock

New federal overtime rule that would affect millions has been blocked by federal court

Credit: CNNMoney/Shutterstock

WASHINGTON –In a blow to the Obama administration’s labor-law plans, a federal court has blocked the start of a rule that would have made an estimated 4 million more American workers eligible for overtime pay heading into the holiday season.

As a result of Tuesday’s ruling, overtime changes set to take effect Dec. 1 are now unlikely be in play before vast power shifts to a Donald Trump administration, which has spoken out against Obama-backed government regulation.

The Fair Labor Standards Act changes the threshold for overtime pay to $47,500. Salaried workers who make less than that would be eligible for overtime pay when they work more than 40 hours in a week.

As the rules currently work, companies can avoid paying overtime to full-time salaried employees making as little as $23,660 by classifying them as “exempt.” Those workers aren’t entitled to overtime pay even if they work more than 40 hours a week.

The salary threshold was set to be updated every three years under the law, meaning it would jump to $51,000 by Jan. 1, 2020.

The White House said the 40-hour workweek has eroded over the years, with workers putting in more hours without being compensated for them.

In September 2016, Oklahoma Attorney General Scott Pruitt joined 20 other states in filing a complaint in federal court, challenging the new rule.

The complaint states this rule would drive employment costs substantially and could force elimination of services or cause layoffs.

On Tuesday, the U.S. District Court in the Eastern District of Texas granted a preliminary injunction, saying the Department of Labor’s rule exceeds the authority the agency was delegated by Congress.

“We strongly disagree with the decision by the court, which has the effect of delaying a fair day’s pay for a long day’s work for millions of hardworking Americans,” the labor department said in a statement.

Oklahoma Attorney General Scott Pruitt praised the court’s decision.

“This decision is a victory for state and local governments as well as businesses in Oklahoma and across the country,” Pruitt said. “The rule would result in hours reduced, salaries slashed and jobs lost- now, this injuction provides certainty to Oklahoma employees and stability for their families.”